Wait-and-See Reserve Bank of Australia (RBA) to Rattle AUD/USD Rebound

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

OCT

2017

10/03/2017 03:30:00 GMT

1.50%

1.50%

-9

+22

October 2017 Reserve Bank of Australia (RBA) Interest Rate Decision

AUD/USD 10-Minute Chart

As expected, the Reserve Bank of Australia (RBA) kept the cash rate at the record-low, with the central bank largely endorsing a wait-and-see approach for monetary policy as officials warn ‘slow growth in real wages and high levels of household debt are likely to constrain growth in household spending.’ The comments suggest Governor Philip Lowe and Co. will carry the record-low interest rate into 2018 as ‘inflation also remains low and is expected to pick up gradually as the economy strengthens.’

The Australian dollar struggled to hold its ground as the RBA stuck to the sidelines, but the reaction was short-lived, with AUD/USD climbing back above the 0.7800 handle to end the day at 0.7835.

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AUD/USD Daily Chart

  • Broader outlook for AUD/USD remains tilted to the downside as both price & the Relative Strength Index (RSI) retain the bearish formations from the summer months, but the pair stands at risk for a near-term rebound as it appears to be coming off of channel support.
  • The failed attempt to test the October-low (0.7625) brings the topside targets back on the radar, with a move back above the Fibonacci overlap around 0.7720 (23.6% retracement) to 0.7770 (61.8% expansion) opening up the next topside hurdle around 0.7850 (38.2% retracement) to 0.7860 (61.8% retracement),
  • However, a more meaningful break/close below the 0.7650 (38.2% retracement) hurdle raises the risk for a move down towards 0.7590 (100% expansion), with the next region of interest coming in around 0.7460 (23.6% retracement) to 0.7530 (38.2% expansion).

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— Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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